Ian McConnell: Taiwan strives for regional cooperation as UK turns back on partners with Brexit

VISITING Taiwan last week, one thing that really struck home was the contrast between its attempts to reach out to its Asian neighbours to secure economic prosperity and the UK’s isolationist approach with Brexit.

It does not take a great deal of thought to work out which is the best approach to take in these days when globalisation and rapid technological change present ever-greater economic challenges. Surely it is a matter of common sense that working together with other countries, where this brings mutual benefit, is most likely to produce success.

Taiwan’s President, Tsai Ing-wen, both in her National Day address on Tuesday last week and at the Yushan Forum the following day, highlighted the importance of her government’s “new southbound policy”.

Through this policy, Taiwan is seeking to develop ties with countries in south-east and south Asia for mutual advantage.

Taiwan, known officially as the Republic of China in its home territory, has good specific reason to pursue the new southbound policy.

It is determined to reduce its economic exposure to the Communist People’s Republic of China, across the Taiwan Strait.

President Tsai, who came to power last year when her Democratic Progressive Party won the election, has taken a more robust stance towards the People’s Republic of China than the previous Kuomintang administration. This has led to increased cross-strait tensions.

At the Yushan Forum, President Tsai set out the economic rationale behind reaching out to countries in south and south-east Asia through the new southbound policy.

She declared these were “some of the fastest-growing economies in the world, powered by young, dynamic and well-educated populations”.

Taiwan’s economy faces headwinds in terms of its “ageing society and low birth rate”, a factor highlighted by Gordon Sun, director of the macroeconomic forecasting centre at the Taiwan Institute of Economic Research in Taipei.

The Yushan Forum, on ‘Asian Dialogue for Innovation and Progress’, featured speakers and panellists from a raft of countries, including Malaysia, Singapore, The Philippines, Thailand, India, Indonesia, Myanmar, and Vietnam.

The new southbound policy being pursued by Taiwan, as well as embracing these countries and others, also aims to develop links with Australia and New Zealand.

Over recent decades, Taiwan has enjoyed great success in the technology sector and achieved rapid economic growth. It is home to major household names in the electronics sector, such as Asus, Acer and HTC.

At the government-backed Central Taiwan Science Park at Taichung, the scale of Taiwan’s technological prowess is plain to see.

Semiconductor giant TSMC has a huge factory there. So does the high-tech AU Optronics, the Taiwanese company listed on its home stock exchange and in New York that makes display panels for the likes of televisions, computers, smartphones and cars as well as producing photovoltaic solar panels.

AU employs about 10,000 people at Central Taiwan Science Park.

Taiwan faces intense competition in the technology sector from mainland China and elsewhere in Asia. This competition is highlighted by Connie Chang, director-general of the department of overall planning at Taiwan’s National Development Council.

Ms Chang says of Taiwan: “We are really famous around the world for our ICT (information and communications technology) manufacturing but we have very fierce competitors from across the Taiwan Strait and even south Asia.”

AU Optronics is well aware of this. For example, in its solar panels business, it has focused on the premium end of the market and developing the efficiency of its products relentlessly. Efficiency is particularly important where space for panels is limited.

Asked whether competitors in the People’s Republic of China with lower-efficiency panels would eventually catch up, TY Lin, senior associate vice-president of AU Optronics’ solar business, replies: “We have a certain gap. We have to keep that gap. That is the only way to survive in a business.”

Ms Chang notes Taiwan will not be able to maintain its strong position in the technology sector by being cheap but will have to move up the value chain. She declares Taiwan is now at a “crossroads of serious industrial restructuring”.

For Taiwan’s technology sector, cooperation with other countries will be important, in terms of driving innovation as well as working out where it makes most sense to locate various parts of the production process.

It will not necessarily be an easy road for Taiwan in producing results from the new southbound policy.

The Taiwan Institute of Economic Research highlighted a view that the new southbound policy would deliver more if it was accompanied by free trade agreements between the east Asian economy and the countries with which it aims to cooperate and build greater economic ties.

The problem in this regard is that, when it comes to such free trade agreements, the shadow of the People’s Republic of China tends to loom large over Taiwan.

However, while there will be challenges, common sense tells you Taiwan is doing the right thing in extending the hand of cooperation to south and south-east Asian nations and Australasia.

What a contrast to the UK approach. The UK’s decision to exit the European Union has thrown its future trade arrangements with its key export markets in the bloc and with other countries around the world into doubt.

It has also plunged into doubt the ability of companies operating in the UK to secure the skills and labour they require from other EU member states.

The likes of overseas-based car manufacturers, which no doubt located in the UK in large part because it provided free access to EU markets, will be watching the threat of hard Brexit with interest. And financial institutions stand ready to progress further their contingency plans, amid continuing shambolic uncertainty created by the UK Government.

Turning your back on your neighbours, following decades of mutually beneficial arrangements that have helped economies and standards of living amid the growing challenges of a fast-moving globalised world, just beggars belief.

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